US natural gas futures fall to four-year low

US natural gas futures fell on Monday to their lowest in almost four-years on forecasts for less cold weather and lower heating demand over the next two weeks than earlier expected and a drop in global liquefied natural gas (LNG) prices to record lows.

Front-month gas futures for March delivery on the New York Mercantile Exchange fell 7.4 cents, or 4%, to $1.784 per million British thermal units (mmBtu) at 8:34 a.m. EST (1334 GMT). If the contract closes at its current level, it would be the lowest settle since March 2016.

Since hitting an eight-month high of $2.905 per mmBtu in early November, futures have collapsed 39%. Record production and mild weather have enabled utilities to leave more gas in storage, making shortages and winter price spikes unlikely.

Lack of supply concerns caused speculators to increase their short positions on the NYMEX last week for a record 12th week in a row to an all-time high, according to US Commodity Futures Trading Commission data.

Global LNG prices in Europe and Asia plunged to record lows as the coronavirus cut demand for gas in China. Those LNG prices had already collapsed this winter on mild weather in Europe and Asia, record gas stockpiles in Europe and reduced economic growth due to the US-China trade war.

Meteorologists projected weather in the US Lower 48 states will turn colder-than-normal from Feb. 13-15 and Feb. 24-25. The rest of the time it will be mostly warmer than normal. That is warmer than Friday's outlook, which called for cold from February 13-22.

Refinitiv, a data provider, projected average demand in the Lower 48 states, including exports, would only reach 121.3 billion cubic feet per day (bcfd) this week and 121.6 bcfd next week. That is much lower than Refinitiv's outlook on Friday of 124.6 bcfd this week and 129.3 bcfd next week due an expected collapse in heating demand.

The amount of gas flowing to US LNG export plants, meanwhile, was on track to fall from 8.8 bcfd on Sunday to a three-week low of 8.1 bcfd on Monday due to declines at Cheniere Energy Inc's Sabine Pass plant in Louisiana, according to early pipeline flow data from Refinitiv that is subject to change later in the day. That compares with an average of 9.2 bcfd last week and an all-time daily high of 9.5 bcfd on Jan. 31.